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tamaranim1 [39]
3 years ago
14

John decided to leave his job and open a bookshop in the city center. He was working as an engineer before and getting an annual

salary of $35000. For the bookshop he paid $20000 for his worker, $15000 for rent, $10000 for utilities. He used his savings that was equivalent to $60000 at an interest rate of 7%. He bought all the books that he planned to sell by his savings. If he opens his bookshop in mall rather than city center his profit was predicted to be $25000. At the end of the first year his revenue from sales was identical to $210000. For John a) Calculate the implicit costs. b) Calculate the explicit costs. c) Calculate the total cost. d) Calculate his profit/loss. e) Should he continue to the business or go back to his job?
Business
1 answer:
marishachu [46]3 years ago
3 0

Answer:

a) Calculate the implicit costs

Implicit costs are the opportunity costs, the earnings that John forgone for running his business. These are:

His $35,000 annual salary as an engineer.

His $60,000 savings earning a 7% interest rate, for a total annual return of $64,200,

So his total implicit costs are 35,000 + 64,200 = $99,200

b) Calculate the explicit costs.

The explicit costs are the things John has to actually pay money for while running his business: 20,000 for his worker + 15,000 for rent, and 10,000 for utilities = 45,000 in total.

c) Calculate the total cost.

Total costs = implicit costs + explicit costs

Total costs = 99,200 + 45,000

Total costs = 144,200

d) Calculate his profit/loss.

His accounting profit is the revenue he obtains from his business minus his explicit costs:

accounting profit = 210,000 - 45,000 = 165,000 profit

His economic profit is the revenue minus his total costs

economic profit = 210,000 - 144,200 = 65,800 profit

e) Should he continue to the business or go back to his job?

He should continue running his business because he is earning both an economic profit and an accounting profit compared with what he was earning as an engineer + his savings.

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4 0
1 year ago
Bramble Corp. incurs the following costs to produce 9900 units of a subcomponent: Direct materials$8316 Direct labor11187 Variab
matrenka [14]

Answer:

$3,762

Explanation:

The computation is as seen below

Total cost when the production is 9,900 units

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Direct labor $11,187

Variable overhead $12,474

Total $31,977

But,

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5 0
2 years ago
If the marginal propensity to consume is equal to 0.85, then a $500 increase in disposable income leads to a:
AlekseyPX

The question is incomplete. The complete question is stated below.

If the marginal propensity to consume is equal to 0.85, then a $500 increase in disposable income leads to a:

a. $400 increase in consumption spending

b. $75 increase in consumption spending

c. $425 increase in personal saving

d. $75 increase in personal saving

Answer:

If a $500 increase causes an increase of $425 in consumer spending, the rest of $75 is the increase in personal saving. Thus, option D is the correct answer.

Explanation:

The marginal propensity to consume or MPC is the percentage of the additional income that will be used for consumption spending. It is a concept that is used to calculate how much of an increase in income will be used in consumption and saving. The formula to calculate MPC is,

MPC = Change in consumer spending / Change in income

0.85 = Change in consumer spending / 500

500 * 0.85 = Change in consumer spending

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2 years ago
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frez [133]

Answer:

(A) I, II, and IV only

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The Material Requirements Planning MRP is used to calculate tha materials needed for production. It may be done by software but it can be done without any technological tool.

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What is it about incentive systems that makes them so attractive to leaders attempting to implement organizational change
sveticcg [70]

Answer:

Incentive systems are so attractive to leaders who attempt to implement organizational change because they are powerful tools that can influence and motivate workers to embrace organizational change.

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3 years ago
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